The novel focuses on Lydia (Lyddie) Worthen, an independent young woman who has lived most of her life in a small cabin in Vermont. Her general philosophy of life is established early in the first chapter. She is fiercely independent, proud, and is "not going to be beholden to the neighbors for anything so trivial as her own comfort." She dreads charity and, as a result, constantly tries to save money. Lyddie has not been educated, but is both brave and intelligent. She is also devoted to her family, particularly her younger brother, Charlie.

Lyddie has the ability to take charge in difficult situations, as when the bear breaks into her cabin in the first chapter and when the coach breaks down on the way to Concord. Initially, Lyddie is intolerant of other people's stupidity or lack of common sense. Indeed, when she is asked to help Brigid learn how to run the loom at the factory, she has absolutely no patience. Ultimately, Lyddie is a survivor. She withstands setback after setback and is deserted by nearly everyone that matters to her. Along the way, however, she begins to care for others, giving up some of her dreams to help them. Indeed, Lyddie becomes quite generous. She takes in her sister, Rachel, after her mother's death and then is willing to give her up so that Rachel can have a better life. She gives her life savings to a runaway slave, Ezekial Abernathy, provides Brigid money for; a doctor, and is eventually fired because she protects Brigid from the overseer. In the end, she determines to become educated and does not immediately accept Luke Stevens' marriage proposal, although that might be the easiest thing to do. While the novel implies that she may eventually return to Luke, she will do it on her own terms.

Despite Lyddie's independence, she encounters a number of people who become her mentors or helpers. The Stevens family offers her help, paying a substantial sum for the calf she wants to sell. They also look after the Worthen farm in her absence. Luke Stevens, in particular, cares a great deal for Lyddie and eventually asks to marry her. From Ezekial Abernathy, a slave she helps, she learns about the concept of slavery and determines to become independent herself. When Lyddie takes her first job at Cutler's Tavern, the cook Triphena allows her to return to the Worthen farm to check up on things. Then, when Lyddie is fired for making the trip, Triphena gives her money and shoes for her journey to Concord. In Concord, Mrs. Bedlow, who runs the boarding house, takes pity on Lyddie and even bends the rules when Rachel comes to stay with her.

Perhaps Lyddie's most important mentor is Diana Goss, who teaches her how to run the looms and to question her treatment at the factory. Diana is viewed as a radical because she fights for labor reform, yet she never forces her ideas on Lyddie. Diana, who is an orphan, thinks of the factory girls as her family and treats Lyddie as a sister. She sees that Lyddie has postage and paper to write to her family and finds a doctor to care for Lyddie when she is injured. Ultimately, Diana leaves the mill because she becomes pregnant, not because of her participation in the Female Labor Reform Association. Significantly, Lyddie seeks Diana out when she also leaves the factory.

In Concord, Lyddie becomes close to several other young women who also work at the factory. Together these girls represent the diversity that could be found among nineteenth-century factory workers. Her roommates include the aristocratic and delicate Amelia Cate, who teaches Lyddie the rules she is supposed to live by. According to Lyddie, Amelia is "always instructing her to be grateful about things that Lyddie, try as she might, could not summon the least whiff of gratitude over." Amelia criticizes Lyddie's speech and is shocked when Lyddie shows little inclination to go to church. Amelia also feels that reading novels is a waste of time.

Like Lyddie, Prudence Allen is from Vermont. Prudence has a suitor who wants her to give up factory work, which she does when she becomes ill. It is Lyddie's third roommate Betsy, who interests her in reading and education. Lyddie survives the first few months in the factory largely because Betsy reads to her from Oliver Twist. It is Betsy who teaches Lyddie the song, "I Will Not Be a Slave," and who suggests that Lyddie may want to go to college. Eventually, Betsy's own dreams are frustrated; like Prudence she becomes ill, losing her savings and her health. In the end, Betsy's uncle comes for her and takes her back to Maine. As Lyddie's roommates leave, the factory begins to hire Irish immigrants, such as Brigid, whom she must train.

The weaving room where Lyddie works is run by an overseer, Mr. Marsden, who notices Lyddie because she is clearly the best worker in the mill. He eventually is attracted to Lyddie, putting his arm on her sleeve whenever he passes by her, then finally trying to take advantage of her. Lyddie, however, repulses him by stomping on his foot. Later, Mr. Marsden also threatens Brigid and sees to it that Lyddie is fired after she comes to Brigid's rescue.

All the time Lyddie is at the factory, she is concerned about her family, which has been split up. Lyddie's brother, Charlie, who spent one winter with her alone in the cabin, has gone to work in a mill. While Lyddie views herself and Charlie as nearly the same person, Charlie finds a new family and grows increasingly distant towards her. Lyddie's mother, Mattie, has become fanatically religious and has shucked off the family "like corn husks to follow her craziness." Lyddie's Uncle Judah finally puts Mattie in an asylum in Brattleboro where she dies. Toward the end of the book, Lyddie is reintroduced to her younger sister, Rachel. For a time, Lyddie becomes Rachel's surrogate mother and begins teaching her to read. Yet, when the Phinneys, the family that has adopted Charlie, want to raise Rachel as well, Lyddie permits her to leave.

As is the case with most of Paterson's books, Lyddie is concerned with standing up to adversity, developing friendships, resisting restrictive gender roles, and discovering the value of literacy. In Chapter four, Triphena tells Lyddie a story about a frog who falls into a pail of milk and kicks so hard that he makes butter before he dies. The image of this frog who futilely struggles against great odds becomes important to Lyddie who struggles her whole life. Lyddie is also torn between a desire to isolate herself from others and the need for friendship and her duty to her family. She is also determined to achieve her goals regardless of restrictions supposedly imposed on women.

Lyddie also validates the importance of reading, particularly novels. Lyddie is herself a storyteller; she stores up stories to tell Charlie later. She also finds that hearing stories like Oliver Twist give her a reason to live. She counters Amelia's attacks on books by arguing that reading Oliver Twist was not silly, it "was life or death." Later, after teaching herself to read, Lyddie also devours Dickens's American Notes for Public Circulation, the Narrative of the Life of Frederick Douglass, and the Bible. When Rachel comes to stay at Lowell, Lyddie in turn introduces her to books, reading her nursery rhymes and the Psalms. When Lyddie finally leaves the factory, the one present she gives to the illiterate Brigid is a copy of Oliver Twist.